While Gen Z and millennials may not be as experienced in the workplace as older generations, research shows that they have a strong entrepreneurial spirit. According to Bankrate’s Side Hustles Survey, 48 percent of Gen Zers and 44 percent of millennials have a side hustle. Combining drive, independence and a desire to effect change, these generations are setting out to prove they have the guts it takes to make it in business.
And with the rise of social media and online tools, they also have the resources they need to make business happen more effectively than ever. We’ll cover business trends, the reasons behind Gen Z and millennials’ American dream to own a business and how to get off the ground.
Key insights
- 93% of Gen Z has taken at least one step toward exploring entrepreneurship, according to ZenBusiness’s 2023 Neurodiversity and Entrepreneurship Survey.
- 50% of Gen Zers want to become entrepreneurs or start their own businesses, according to The Rise of Gen Z and the Future of Work” Survey by Morning Consult.
- Most Gen Z business owners define success as being their own boss (46%), having a flexible work schedule (43%) and having a positive work-life balance (42%), according to Square’s Gen Z Entreprenuer Report.
- 80% of Gen Z business owners started their businesses online or had a mobile component, according to Square’s Gen Z Entrepreneur Report.
- 45% of Gen Z business owners use their personal savings to fund the startup phase, according to Square’s Gen Z Entrepreneur Report.
- 18% of Gen Zers and 20% of millennials want their side hustle to develop into their main source of income, according to Bankrate’s Side Hustles Survey.
Why Gen Z and millennials want to own a business
As the economy and ideas around work continue to shift, Gen Zers and millennials are reevaluating what the American dream means to them and how owning a business can support it.
Potential of financial freedom and stability
On average, Americans feel they need to earn over $186,000 in annual income to feel financially secure or comfortable, according to Bankrate’s Financial Freedom Survey. Since the U.S. Bureau of Labor Statistics found the average annual salary in the U.S. was $65,470 in 2023, most Americans are far from the stability that they need.
Owning a business gives you control over your income and doesn’t come with a salary limit as long as your business continues to grow.
Entertaining a business idea doesn’t mean you have to jump all in from the beginning. Side hustles are a great way to test a business idea and help it gain traction before transitioning to a full-time career.
Social media influence
Given the popularity of social media and influencers, younger generations may be more motivated to start a business. Social media and technology offer additional tools to help a business succeed, such as raising brand awareness, quickly opening on an e-commerce platform or finding new clients, that weren’t available to older generations.
That said, Gen Z and millennials will need to remain determined in the age of social media, especially if the drive to start a business is influenced by a skewed expectation of what they need to achieve financial freedom or how easy it appears to run a business. As entrepreneurs of any age group soon find, a successful business venture requires a lot of time, patience and persistence.
Flexibility
Imagine a life where you get to set your work schedule and decide what you get to work on each day. If a particular part of your business isn’t doing well or you just decide it doesn’t bring you joy, you can cut that part of your business or hire someone else to do it. According to Square’s Gen Z report, 43 percent of Gen Z business owners define success as having a flexible work schedule.
A flexible work schedule allows you to get work done on your own terms. You can juggle all the demands of life — work, family and social activities — based on what works best for your life.
Sense of purpose
According to Deloitte’s 2024 Gen Z and Millennial Survey, 86 percent of Gen Zers and 89 percent of millennials say that it’s important for their work to serve a purpose. These younger generations don’t want to simply clock in and out for a paycheck every day. They want to make a difference in the world around them through the work that they do.
Since entrepreneurship gives people the chance to work on projects that matter to them, many are looking to business ownership to fill this need.
Lack of economic opportunity
Unfortunately, many young Americans turn to starting a business because they need to make more money. They either don’t make enough from their traditional jobs or they lack the cushion to make large purchases and be financially secure.
According to Bankrate’s Side Hustles Survey, more than a third (36 percent) of U.S. adults earn extra money beyond their main source of income through a side hustle, with nearly 1 in 3 (35 percent) believing they’ll always need a side hustle to make ends meet.
As living paycheck to paycheck is becoming more common, starting a business can create more economic opportunities and provide additional stability.
How to start your own business
Starting your own business begins with some groundwork to lay the foundation for success. You will need to put in the necessary effort to get your business off the ground and make it profitable. But over time, you can create a business that’s fulfilling and checks all the boxes as your dream job. To lower the risk of business failure, there’s some prep work you’ll need to do.
Find your perfect business idea
First, you need a solid, marketable business idea that serves a specific need and customer. Marketers call this your unique value proposition: in other words, what makes you different? You can come up with a business idea by exploring different industries and ideas you’re interested in. Then, find a gap in the market for a need that competitors aren’t meeting.
For example, you might find that you can’t find vegan beauty products in your local grocery store. You do your research and discover that these products aren’t in a majority of stores nationwide and have to be specially ordered — despite the popularity of plant-based diets and sustainable living. You then create these products and market them to grocery chains with a vision to bring vegan beauty products to the average consumer.
Develop a business plan
Next, you need to write a detailed business plan. Your plan will give an overview of your business, detail your goals and the metrics you’ll use to gauge success and outline your marketing and funding strategies. You’ll want a thorough, well-researched plan, as investors and lenders often want to see one before making any decisions.
Register your business
To get started with your business, most businesses will need to register the type of business entity with state and local governments. You may start your business as a sole proprietor, limited liability company or corporation. You may have to file paperwork with the Secretary of State’s office or the business bureau. To make this process smooth and easy, you can use a registered agent service, like LegalZoom, to take care of the paperwork for you. The state in which you want to start your business will also have some literature on forming your company on its government sites.
Fund your business
While you may be excited to open your business and pursue your passion, you will need to review your business’s finances. This starts with how you’ll fund the business from the beginning. Ways you can get funding:
- Personal savings. Many business owners use personal funds from savings to get their businesses started until they are more established.
- Crowdfunding. Crowdfunding involves raising money from family and friends or through a platform of investors who may be interested in your business idea.
- Business grants. You can apply for grants from federal or state governments or corporations. You may need to compete for the grant with a live presentation or otherwise present what your business does to the organization.
- Startup business loan. You could try getting business funding from a traditional or online lender. That said, lender minimum requirements are often out of reach for brand-new startups. You’ll need to do your research to find a startup lender that may lend to your business.
Bankrate insight
The 2024 Small Business Credit Survey found that 28 percent of businesses under two years used funds from owners and 15 percent used a loan from family and friends. If they sought more traditional financing options, like a line of credit or business loan, 26 percent were denied, and less than half (43 percent) were fully approved.
The bottom line
Gen Z and millennials are serious about starting their own businesses one day, dreaming about the job flexibility, purpose and financial freedom it could give them. Yet to make that American dream a reality, they will need strategic planning and to avoid common mistakes that new business owners make, as well as determination and creativity.
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